Accounting Standards Board chairman Sir David Tweedie vowed this week to use his last year in office to defend the ASB’s role.
Speaking as he presented the latest draft of its Statement of Principles, published today, Sir David, who is in the fourth year of his second five-year term, said he would not be putting his name forward for reselection.
‘If the company law review proposes to use IASs, it makes sense to ask what the point is in having our own national standards setter,’ said Sir David. The ASB would still have a role in protecting UK accounting practice from less sophisticated international standards and in leading the opposition to the US Federal Accounting Standards Board.
‘I’m going in a year’s time, so I can’t be accused of fighting to save my own job,’ he added.
The statement of principles – the ASB’s third – is closely based on the International Accounting Standards Committee’s framework. According to the statement:
– true and fair view remains fundamental;
– statement mirrors international practice;
– users’ focus on p&l and other performance statements;
– p&l items defined as either ‘gains’ or ‘losses’;
– balance sheet can only show assets, liabilities or ownership interest; and
– some balance sheet items can be carried at historical cost, others at current value.
The ASB’s last version sparked a furore in 1996. Critics argued it sacrificed historical cost accounting for the current value approach and prioritised the balance sheet over the p&l account.
‘The performance statement will be the issue on which the whole thing will stand or fall,’ said Ernst & Young technical partner Ron Paterson.
‘They are neglecting the other side of the double entry – what goes into the p&l and how you describe it.’
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